Classic Liberal Blog

The Wizard of Oz, Ben Bernanke, says the recession is over:

“From a technical perspective, the recession is very likely over at this point,” Bernanke said in responding to questions at the Brookings Institution. “It’s still going to feel like a very weak economy for some time because many people will still find that their job security and their employment status is not what they wish it was.”

Yeah, that's what our Overlords in Washington and their minions want us to believe anyways. And Robert Samuelson, writing in the Washington Post today, is trumpeting their story!

Why There Was No Depression

How close did we come to the Great Depression 2.0? That question will spawn a cottage industry of books, studies and conferences. But Christina Romer, the head of President Obama's Council of Economic Advisers, already has an answer: pretty darn close. Her conclusion deserves attention because Romer, in her previous academic career, was a scholar of the Great Depression.

That these huge declines didn't lead to depression mainly reflects, as Romer argues, countervailing government actions. Private markets for goods, services, labor and securities do mostly self-correct; but panic, driven by the acute fear of the unknown, feeds on itself and disarms these stabilizing tendencies. In this situation, only government can protect the economy as a whole, because most individuals and companies are involved in the self-defeating behavior of self-protection.

I'm sick and tired of the economically illiterate nonsense peddled in the media these days. This is nothing more than cheaply disguised propaganda! They want you to believe the "government saved us" from peril, due to their omnipotent wisdom. All in an effort to lull people into their collectivist tyranny.

Samuelson's analysis is so bad, it's not worth my time to correct. And as far as Christian Romer goes, she's a buffoon! Just a Statist wearing economist clothes.

The Keynesians have no leg to stand on. Let's suspend our disbelief and entertain the hypothesis that the way to help a depressed economy is for politicians to spend borrowed money. Even so, only the most convoluted story can tie the historical movements of federal deficits with the national unemployment rate. In her latest attempt, Christina Romer focuses on events of the 1930s and 1940s that support her theory, while ignoring the events that demonstrably refute it.

Reality Check:

The World Bank is running out of money! Yep, the brainchild of John Maynard Keynes, is about to go bust.

The World Bank problem is Keynesian economics in a nutshell. A paper pyramid built on nothing. But there is a silver-lining here ... Because the World Bank does significant damage to the economies it "helps," as it lines the pockets of the elite bankers.

CAUTION: Stock Market Crash /Collapse Dead Ahead

After a massive upswing in US stocks over the last six months, the recent rally may finally be coming to an end. It seems that the trend of rising stocks on bad or better than expected news may be in a reversal, as evidenced by market participants’ caution over the last couple of weeks.

“probably a total collapse in the second half of the year when it becomes clear that the economy is a total disaster.” - Marc Faber

“It’s going to really be an ugly scene. We are really encouraging people now to take pro-active measures and prepare for the worst. Don’t spend an extra dime.” - Gerald Celente

“I am not buying shares anywhere in the world as we speak.” - Jim Rogers

Though we continue to see most mainstream analysts talk the bull market talk, it looks as if the bull may be in trouble, especially if individual investors realize what all of the big boys talking their books already know - that the economic fundamentals are simply horrific and the markets are already pricing in GDP growth of over 5% for the next 4 quarters. Considering that GDP grew at 0.7% in the 2nd quarter, that seems highly unlikely.

The Recovery That Isn't

For those market boosters who are prattling on about the possibility of a "jobless recovery," I offer an invitation to join me for a breakfast of "fat-free bacon," "eggless omelets," and "no-carb bread." As unappetizing as such a meal may sound, it would nevertheless offer more substance than the oxymoronic concept of an economic resurgence without job creation.

Those who do cling to the absurd belief that, absent exponential productivity gains, the economy can expand while workers are being laid off will undergo a massive test of their convictions now that it's clear the employment picture is bleak. Today's weaker-than-expected report on non-farm payrolls revealed that employers shed 263,000 jobs in September. The losses propelled the headline unemployment rate to a 26-year high of 9.8%. U6, the Bureau of Labor Statistics' most complete measure of unemployment, has risen to a dismal 17%.

There is no question that the sense of panic has temporarily subsided. In recent interviews, Treasury Secretary Geithner has been almost giddy in his descriptions of the recovery – all the while crediting his own policies for averting disaster. Americans are once again taking the government's bait by spending money they don't have to buy things they can't afford ... But depleting savings and increasing borrowing does not a recovery make.

Another prerequisite to any real economic expansion is the potential for business owners to earn profits. With increased regulation and higher taxes on the way, these incentives are being diminished. In fact, via a phenomenon called "regime uncertainty," our current policy path is actually encouraging businesses to contract in order to prepare for a more hostile business environment.

There's big trouble ahead folks. Please do yourself a favor, and make sure you're prepared!

See also: Another reminder that the MSM is in the tank for Obama, as if you didn't know that.